AT&T posted a narrower fourth-quarter loss, which was again weighed down by a change in the valuation of its employee pension plan.

Reporting results today, the company, however, added 780,000 contract subscribers in the period, and sold a record 10.2 million smartphones, of which 8.6 million were iPhones.

AT&T posted a loss of $3.9 billion, or 68 cents a share, compared with a loss of $6.7 billion, or $1.12 a share, in the same period a year ago. Excluding the pension issues, an adjustment for the sale of its advertising units, and the impact of Superstorm Sandy, it posted adjusted earnings of 44 cents a share.

Analysts, on average, had a forecast of 45 cents in per-share earnings and $32.2 billion in revenue, according to Thomson Reuters.

Rival Verizon on Tuesday reported a wider fourth-quarter loss and results that fell below expectations, but painted a rosier picture for 2013 amid cost cuts and improving business fundamentals.

Neither Verizon nor AT&T can escape the reality that when iPhone sales spike for the quarter, so do the subsidies paid out to Apple. That's one reason why the carriers have been aggressively promoting other phones, which require a small subsidy and don't impact earnings as much.

AT&T has traditionally been the most reliant on the iPhone. With the iPhone representing a majority of smartphones sold in the period, its bottom line took a hit. The company said that Android sales also broke its record despite the smaller percentage.

AT&T has been attempting to compensate with mobile data sharing plans. The company said that 90 percent of its smartphones are on family, business, or mobile share plans, and that 6.6 million subscribers are on the data share plan, with more than a quarter opting for the higher-end 10-gigabyte account.

Beyond phone plans, AT&T has been increasingly expanding into other products, connecting everything from cars to pill bottles and tablets. The company added a net 246,000 connected devices in the period, as well as 234,000 customers through resellers.

In total, the wireless business generated $17.6 billion in revenue, up 5.7 percent from a year ago.

The wireline business, which continues to see a decline in traditional DSL connections, saw 192,000 net new U-Verse TV customers to reach 4.5 million, and added 609,000 U-Verse Internet customers to hit a total of 7.7 million. Including DSL, overall broadband subscriber growth was flat.

AT&T's wireline revenue slipped 0.5 percent to $14.9 billion.

Meanwhile, AT&T expects its adjusted per-share earnings to grow in the upper-single-digits or higher on a percentage basis in 2013. Consolidated revenue growth should exceed 2 percent. Analysts are expecting per-share earnings growth of about 9 percent and revenue growth of about 1.5 percent.

Capital spending, meanwhile, should total about $21 billion.

Chief Executive Randall Stephenson noted during a conference call with analysts that for 2013, AT&T will focus on the aggressive rollout of Project VIP, as well as scaling new businesses like digital life, mobile wallet, and connected cars.

Project VIP, short for Project Velocity IP, consists of an investment of $14 billion over the next three years -- $8 billion for wireless and $6 billion for wireline -- and is designed to expand the company's 4G LTE coverage on the wireless side and faster service, more fiber-optic lines, and expanded U-Verse availability on the landline side.

He also noted that while wireless companies will always be looking for more spectrum, he feels "good" about AT&T's position at this time. AT&T has signed nearly 50 deals to boost its average national spectrum by about a third, he said. Earlier this week, AT&T said it is spending $780 million to scoop up a carrier called Atlantic Tele-Network.

He added that AT&T may make a few more spectrum deals this year to fill in gaps.

"I like how we're set up for 2013," Stephenson said.

Updated at 2:15 p.m. PT and again at 3 p.m. PT with 2013 projections and comments from conference call.

About the author

Shara Tibken is a senior writer for CNET focused on Samsung and Apple. She previously wrote for Dow Jones Newswires and the Wall Street Journal. She's a native Midwesterner who still prefers "pop" over "soda."
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Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.
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